ETC Calculation: Reestimating Remaining Work Bottom-Up

PMBOK v8 Definition

The Estimate to Complete (ETC) is "the expected cost to finish all the remaining project work." According to PMBOK v8, when work is proceeding as planned, ETC can be calculated using "ETC = EAC − AC." Alternatively, when a more accurate forecast is needed, the project team should "reestimate the remaining work from the bottom up." If both the CPI and SPI influence the remaining work, the formula becomes "EAC = AC + [(BAC – EV) / (CPI × SPI)]."

Why It Matters for the Exam

This concept appears frequently in PMI exam questions on earned value management (EVM) and forecasting. Questions typically present a scenario with BAC, EV, AC, and SPI/CPI values, then ask you to calculate ETC using the correct formula based on whether performance trends are expected to continue or change.

Key Points to Remember (for the exam)

• Three Calculation Methods: ETC can be calculated as (1) EAC − AC when work proceeds as planned, (2) a bottom-up reestimate of remaining work, or (3) using the formula incorporating CPI × SPI when both cost and schedule performance influence remaining work.

• When to Use Bottom-Up: Use bottom-up reestimation when the original estimates are no longer valid and a detailed, task-by-task reassessment of remaining work is required.

• Critical Distinction: ETC is NOT the same as EAC. ETC forecasts remaining work only; EAC forecasts total project cost at completion.

• CPI × SPI Formula: The formula "EAC = AC + [(BAC – EV) / (CPI × SPI)]" is specifically for situations where BOTH cost and schedule performance will affect the remaining work.

• Input Dependency: ETC calculations depend on accurate AC (Actual Cost) and EV (Earned Value) data, which come from work performance data and the cost baseline.

• Common Confusion: Many candidates confuse ETC with EAC. Remember: ETC = EAC − AC (when work is on plan), while EAC is the total forecast.

Typical PMI Exam Example

Your project has BAC = $100,000, EV = $40,000, AC = $50,000, and CPI = 0.8. The project is proceeding as planned. What is the ETC?

Solution: Since work is proceeding as planned, use ETC = EAC − AC. First calculate EAC = BAC / CPI = $100,000 / 0.8 = $125,000. Then ETC = $125,000 − $50,000 = $75,000.

PMI Exam Traps

• Trap: Using EAC − AC when the question states "reestimate remaining work from bottom up" Reality: "ETC = Reestimate" means you must recalculate from scratch, not use the formula

• Trap: Confusing ETC with EAC in multiple-choice options Reality: ETC is only the remaining work; EAC includes work already done (AC + ETC)

• Trap: Applying the CPI × SPI formula when only CPI or only SPI influences remaining work Reality: Use CPI × SPI only when BOTH factors are specified as influencing remaining work

• Trap: Forgetting to subtract AC when using EAC − AC formula Reality: ETC = EAC − AC, not ETC = EAC alone

Important PMI Connections

Quick Review Questions

1. Your project has BAC = $200,000, EV = $80,000, AC = $100,000. Work is proceeding as planned. What is the ETC?

2. A project manager determines that both cost and schedule performance will influence remaining work. CPI = 0.9, SPI = 0.85, BAC = $150,000, EV = $60,000, AC = $70,000. What is the EAC?

3. When should you use the bottom-up reestimate approach for ETC instead of the EAC − AC formula?

4. Your project's EAC is calculated as $250,000 and AC is $90,000. What is the ETC assuming work is proceeding as planned?

5. What is the key difference between ETC and EAC in terms of what each forecasts?

PMBOK v8 Reference

Section 5 – Tools and Techniques (Table 5-1, pages 209-210)